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Welcome to the Crinetics Pharmaceuticals Fourth Quarter and Full-Year 2023 Financial Results Conference Call. At this time all participants are in listen-only mode. Following the management's prepared remarks, we will hold a question-and-answer session. I will now turn the call over to Corey Davis of LifeSci Advisors. Please go ahead.

Thank you, Sergio, and hello everyone. Joining me on the call today are Scott Struthers, Founder and Chief Executive Officer; Alan Krasner, Chief Endocrinologist; and Mark Wilson, Chief Financial Officer. Also joining us for the Q&A portion of the call are Dana Pizzuti, Chief Medical and Development Officer, and Jim Hassard, Chief Commercial Officer. A press release announcing the fourth quarter and full-year 2023 financial results was issued today and is also available on the Crinetics website. As a reminder, we'll be making forward-looking statements and I invite you to learn more about the risks and uncertainties associated with these statements as disclosed in our SEC filings. Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those stated or implied such statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's news release. The company's other news releases, and Crinetics SEC filings, including its annual report on Form 10-K. I'd also like to specify that the content of this conference call contains time-sensitive information that is accurate, only as the date of this live broadcast February 28, 2024. Crinetics takes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. I'll now hand the call over to Scott Struthers. Scott, go ahead.

Thanks, Corey. Good afternoon, everyone, and thank you for joining us for our quarterly results call. As the company progresses towards commercialization, it's our intent to expand our investor outreach and provide regular opportunities for interactive dialogue. We appreciate your attendance and look forward to our discussion today and on future quarterly calls. To begin, I'll spend a few moments summarizing our recent accomplishments before turning the call over to Alan Krasner, our Chief Endocrinologist, to discuss our clinical programs and recently reported data in some more detail. Before we get started with a review of 2023, I wanted to say how pleased we are to have announced a private placement equity financing of approximately $350 million earlier today. We're very appreciative of the continued support that we've received from new and existing shareholders, who share our long-term vision for building the premier endocrine company to help patients suffering from a wide range of different endocrine-related diseases. This financing is simply one more step forward in that strategy. 2023 was a tremendously successful year for Crinetics on many fronts. I'll begin with our lead development candidate, Paltusotine. Paltusotine continues to deliver impressive results in the two indications for which it is being developed, acromegaly and carcinoid syndrome. In September we reported clinical results in acromegaly that exceeded expectations. Our Phase 3 PATHFNDR-1 trial achieved its primary endpoint of maintaining IGF control and meant all secondary endpoints with high statistical significance. As a reminder, PATHFNDR-1 was designed to evaluate oral Paltusotine in patients with acromegaly, who are already controlled on standard-of-care, which are injected somatostatin receptor ligand depots or SRL therapy. Our intention for this trial is to support an indication for the maintenance of acromegaly treatment. In other words, to maintain biochemical control in patients switching from standard-of-care injectables to once daily oral Paltusotine. In contrast, our second Phase 3 trial, PATHFNDR-2, is evaluating Paltusotine in patients with acromegaly, who have elevated IGF levels above the normal range. These are patients who are either naive to therapy, untreated for at least four months or patients who agreed to wash out of the standard-of-care as part of entering the study. We completed enrollment in PATHFNDR-2 last year, and we are on track to unblind and report top-line results in March. If successful, we intend to submit an NDA supported by these results from both studies to the U.S. FDA in the second-half of 2024. Overall, our PATHFNDR program is intended to provide a broad label for the treatment of acromegaly. Moving now to carcinoid syndrome, our second intended indication for Paltusotine. In December, we reported initial results from our ongoing open-label Phase 2 trial in patients with carcinoid syndrome. From a safety point of view, Paltusotine continues to be well tolerated in this patient population consistent with what we've seen from our other clinical studies to-date. With regard to efficacy, to-date we are seeing clear reductions in the two key symptoms of carcinoid syndrome, which are excess bowel movement frequencies and flushing episodes. The results from December were from a subset of patients, and the study is now fully complete with a total of 36 patients. In the profile, we reported the initial results is confirmed and the top line results that we are expected in the first-half of this year. We're excited to move forward into Phase 3 studies in carcinoid syndrome, pending alignment with the FDA on the study design. Following in the footsteps of Paltusotine, we built a remarkably deep pipeline. Our second molecule 4894, is currently being evaluated in an open-label Phase 2 trial in patients with congenital adrenal hyperplasia or CAH and a second trial in patients with ACTH dependent Cushing’s disease. People with CAH are unable to make cortisol and instead make excess adrenal androgens and 4894 is an oral ACTH antagonist designed to normalize levels of adrenal androgens. Alan will elaborate on this program, and we anticipate reporting initial results from a subset of patients in the second quarter of the year. Beyond 4894, we're also advancing multiple preclinical programs, including a parathyroid hormone or PTH, receptor antagonist for the treatment of hyperparathyroidism, a TSH antagonist for the treatment of Graves' disease and thyroid eye disease, and candidates for metabolic diseases, including diabetes and obesity. These are just a few of the many early stage programs in our pipeline, and we plan to provide you with regular updates on these and other development candidates when appropriate. In anticipation of a potential 2025 launch of Paltusotine, we also remain focused on building out our commercial organization. Acromegaly and carcinoid syndrome together present a multi-billion dollar market opportunity. We're actively developing commercial capabilities for these markets, identifying key prescribers, and tailoring our launch strategy. We know that PATHFNDR-1 data is resonating well, creating excitement among the acromegaly and carcinoid syndrome prescribers and the patients. Understanding paired perspectives is also crucial and Jim Hassard, our Chief Commercial Officer is building a market access team to build relationships with these important stakeholders. We're preparing logistics, finalizing specialty pharmacy agreements, and generally preparing the company for commercial readiness on all fronts. Looking forward to the rest of 2024 and ‘25, we anticipate multiple transformative milestones ahead completing PATHFNDR-2, completing Phase 2 followed by initiation of a Phase 3 study in carcinoid syndrome, completing a Phase 2 and initiating a Phase 3 in CAH, submitting our first NDA, and launching Paltusotine for acromegaly, if approved. Moreover, continuing to advance our pipeline of promising candidates in high prevalence indications that are beginning to emerge from discovery. We will also continue to invest in our world-class discovery capabilities that are the roots of our long-term success. With that, let me hand it over to Dr. Alan Krasner, our Chief Endocrinologist, to talk about our clinical program and the results we're seeing today. Alan?

Thank you, Scott. Today I will provide a summary of the results we recently reported from our clinical programs and what this means for the continued development, starting with Paltusotine. As Scott already mentioned, our Phase 3 PATHFNDR-1 study of oral Paltusotine in patients with acromegaly achieved all the goals set out for the study. In September, we reported highly statistically significant results in our primary endpoint and all secondary endpoints. Before I dive into the data, I'd like to reiterate that this trial was designed to evaluate Paltusotine in patients, who are already biochemically controlled on injectable SRL therapy and switched to Paltusotine. In acromegaly, excess growth hormone acts at the liver to secrete excess insulin-like growth Factor 1 or IGF-1. Participants in the PATHFNDR-1 trial were previously treated with injectable SRL therapy and had IGF-1 levels at baseline of less than or equal to one times the upper limit of normal. The goal for Paltusotine in this trial was to maintain this level of biochemical control. Therefore, the primary endpoint was the proportion of participants, who maintain IGF-1 levels of less than or equal to one times the upper limit of normal on Paltusotine, compared to placebo. We also pre-specified clinically important metrics as secondary endpoints, the change from baseline in IGF-1, the change in acromegaly symptoms using a fit-for-purpose acromegaly symptom diary, and the proportion of participants able to maintain growth hormone levels of less than 1 nanogram per milliliter. In the study, we saw a remarkable 83% or 25 of 30 patients, who received Paltusotine meet the primary endpoint. This is compared to only 4% or one out of 28 patients receiving placebo. The magnitude of this difference is highly statistically significant, with a P-value of less than 0.0001. In all secondary endpoints, we also achieve statistical significance. Participants in the Paltusotine group maintained control of IGF-1 levels, while those on placebo rose markedly. And this difference was statistically significant with a P-value of 0.0001. In addition, overall symptom control was measured using the acromegaly symptom diary, or ASD score. Participants receiving Paltusotine maintain control of their symptoms, as measured by the total ASD score. This is compared to an overall increase from baseline as reported by the placebo group. This difference was statistically significant with a P-value of 0.02. Finally 87% of participants receiving Paltusotine, maintain growth hormone levels less than 1 nanogram per milliliter, compared to 28% in placebo. This difference was also highly statistically significant with a P-value of 0.0003. We are very excited about these results that demonstrate durable symptom and biochemical control through a convenient once-daily oral option for patients, who are currently burdened by depot injections. These data are very clear that Paltusotine effectively maintains IGF-1 levels in the normal range. In the draft guidance on the development of drugs for the treatment of acromegaly issued in January 2023, the FDA identified two acromegaly patient populations of interest. Firstly, the maintenance population who were evaluated in the PATHFNDR-1 trial, and secondly, the treatment population that we are currently evaluating in our PATHFNDR-2 study. The treatment population includes those with active acromegaly who are not currently on medical therapy and therefore have an IGF-1 level that is greater than the upper limit of normal. The goal here is to show that a new agent can treat active disease as measured by lowering elevated IGF-1 levels. SRLs are currently used in practice as first-line medical therapy for acromegaly, because published studies have demonstrated that most untreated patients, when treated with SRL monotherapy, have meaningful lowering of IGF-1, although only the minority of patients, particularly among those who are naive to medical therapy, normalize IGF-1. It is not possible to predict which untreated patients, who start out with a potentially wide range of baseline IGF-1 elevations will actually normalize. But it is known that the majority of patients treated with an SRL in previous studies benefited from therapy. For regulatory purposes, the primary objective of PATHFNDR-2 is to demonstrate a statistically greater proportion of subjects on Paltusotine with normal IGF-1 at end of treatment, compared to that achieved with placebo treatment. This was the same primary objective of PATHFNDR-1. However, it is important to note that the absolute IGF-1 normalization rates in PATHFNDR-2 is expected to be lower than that observed in the PATHFNDR-1 population. Remember, the PATHFNDR-1 population were all known to have normal IGF-1 on SRL monotherapy at baseline. PATHFNDR-2 patients would be expected to have a wide range of IGF-1 elevations at baseline. Based on published data, our best estimate of the overall percentage of patients, who achieved normal IGF-1 on drug at the end of treatment in PATHFNDR-2 should be approximately 30%. And this study is powered to show that this is different than that expected in the placebo group. This normalization rate would indicate that Paltusotine is similarly effective to injected SRLs in this patient population and should be able to compete with the injections as a first-line therapy. Although IGF-1 normalization is of interest, perhaps even more relevant to clinical practice is the reduction from elevated baselines that can be achieved with Paltusotine. And this is a pre-specified key secondary endpoint in PATHFNDR-2. Pending results, we hope that PATHFNDR-2 will complement PATHFNDR-1 and allow us to seek a broad indication for Paltusotine in the treatment of acromegaly. PATHFNDR-2 completed enrollment with 111 enrolled participants. We look forward to sharing top line results from PATHFNDR-2 with you in the next month. Paltusotine’s second target indication, carcinoid syndrome, is also showing promising results to-date. In December, we reported initial results from the ongoing open-label Phase 2 trial. As a brief reminder, SRLs are the first-line medical therapy for carcinoid syndrome, and we would expect that oral Paltusotine would compete with the injections in this patient population as well. Carcinoid syndrome arises from neuroendocrine tumors that most commonly originate in the small intestine. The syndrome is caused by tumor production of serotonin and other factors. The two key symptoms that patients experience in this disease are diarrhea and flushing. Our goal in treating carcinoid syndrome patients with Paltusotine is to reduce their total symptom burden. The ongoing Phase 2 study is an open label parallel group study that enrolls patients, who are either naive to SRL treatment or currently treated, untreated, and actively symptomatic, or who are controlled on SRL therapy and willing to wash out prior to entry. The initial results we presented in December included 27 participants. The trial is fully enrolled with a total of 36 participants, and top line results from the full study are anticipated in the first-half of this year. From a safety point of view, Paltusotine was well tolerated with no new safety findings, consistent with what we've seen in our previous studies. In addition, pharmacokinetics in this patient population remains consistent with what we expected to see from prior experience in healthy volunteers. We are also very pleased to have already observed meaningful reductions in the two key symptoms of carcinoid syndrome, excess bowel movements and flushing episodes, even in the initial look at the data. So far, Paltusotine is associated with a 65% reduction in excess bowel movement frequency in patients, who entered the study with greater than three bowel movements per day. In patients who experienced one or more flushing events per day at baseline, Paltusotine is also associated with a 65% reduction in these episodes. As part of the study design, participants had the opportunity to up-titrate their dose of Paltusotine based on pre-specified symptom criteria. However, few patients in the study at the time of the initial analysis required an increase in dose, so we believe we are in the correct range to observe a response. Results of biomarker and other supplemental exploratory endpoints will be analyzed and reported with final results. We are excited about this initial data and look forward to reviewing the full top-line results, which are anticipated in the first-half of this year. Based on the results thus far, we believe Paltusotine is acting like an SRL in terms of its ability to provide symptom relief, and we think the full dataset will confirm this. We will submit the final data to the FDA to discuss at an end of Phase 2 meeting. We look forward to updating you on the Phase 3 trial design details, including dose, registration in our endpoint, and timing once we've had these discussions. Our second candidate following is Paltusotine CRN04894. 4894 is an ACTH receptor antagonist in development for the treatment of congenital adrenal hyperplasia or CAH. Classic CAH is a genetic disorder that affects approximately 27,000 patients in the U.S. These patients have impaired cortisol production, which causes high levels of ACTH. This excess ACTH causes overstimulation of the adrenal cortex, resulting in overproduction of androgens. As an ACTH antagonist, 4894 is designed to act directly at the adrenal gland to normalize adrenal androgen production. 4894 is currently being studied in a Phase 2 open label sequential dose study in participants with CAH. At this stage of development, we are primarily interested in evaluating safety and pharmacokinetics of 4894. However, we're also interested in looking at pharmacodynamics, and in CAH, this is measured primarily using the biomarker androstenedione or A4. Similar to how we presented the carcinoid syndrome data in December, we plan to report initial data from the open-label Phase 2 study in the second quarter of 2024. This will not be full data, but initial data from a small number of enrolled participants. We hope it will give us an early picture of how 4894 is acting in CAH patients. With that I will now hand it over to Mark for a review of the financials.

Thank you, Alan. We ended 2023 on strong financial footing with $558.6 million in cash and investments. In addition, earlier today we announced a $350 million private placement equity financing. This private placement further strengthened our financial position with approximately $900 million on a pro forma basis. We have a solid financial foundation as we prepare for multiple upcoming data readouts and regulatory milestones and as we continue investing in the expansion of our deep pipeline. Research and development expenses were $45.6 million and $168.5 million for the quarter and full-year ended December 31, 2023, compared to $37 million and $130.2 million for the same periods in 2022. The increases were primarily attributable to higher personnel costs and increased outside services, both of which were driven by the advancement and expansion of our portfolio of programs. General and administrative expenses were $17.1 million and $58.1 million for the quarter and full-year ended December 31, 2023, compared to $11.3 million and $42.4 million for the same periods in 2022. These increases were primarily attributable to higher personnel costs. Our net loss for the quarter ended December 31, 2023 was $60.1 million, compared to a net loss of $45 million for the same period in 2022. For the year ended December 31, 2023, the company's net loss was $214.5 million, compared to a net loss of $163.9 million for the same period in 2022. Revenues were $4 million for the full-year ended December 31, 2023, compared to $4.7 million for the same period in 2022. There were no revenues for the quarter ended 2023 compared to $0.7 million for the same period in 2022. Revenues in both periods were primarily derived from licensing arrangements associated with our Paltusotine and CRN01941 product candidates. Net cash used for operating activities during the quarter end of December 31, 2023 was $38.5 million and was $166.3 million for the year end of December 31, 2023. In 2024, we anticipate our cash burn to be approximately $50 million to $60 million per quarter. And we expect that following the $350 million private placement announced earlier today, that our pro forma cash, cash equivalents and short-term investments of approximately $900 million will be sufficient to fund our current operating plan into 2028. I will now hand it back to Scott for closing remarks before we begin Q&A.

Thank you, Mark. We're extremely proud of the progress we've made throughout 2023 and so far in 2024. And 2024 is poised to be a transformative year for Crinetics. We look forward to providing continued updates throughout the year as we progress Paltusotine through regulatory submissions and commercialization, make continued advancements in our pipeline, and continue to create exciting new drug candidates with our discovery efforts. Thank you all for your attention. Operator, we're ready to take questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Joseph Schwartz from Leerink Partners. Please go ahead.

Thanks very much and congrats on all the progress. So first question on PATHFNDR-2, for the patients who are enrolled in this trial that are not currently receiving medical therapy. Do you have a sense of how many of them had previously responded to SRLs versus those that didn't?

Hello, Joe, and thanks. Let Alan answer that question.

Hi, Joe. So in the group where patients haven't been recently treated prior to screening for this study, basically patients who are known not to have responded to SRLs in the past or medical therapy in the past are not eligible for this study. Now, that is largely left to the discretion of the principal investigator, the doctor at the research site. But those patients in theory, if they're known not to be responsive to medical therapy, they should not really be in a trial in which medical therapy is being evaluated.

Right, okay. That's helpful, thanks. And then actually another question on PATHFNDR-2. Do you have a sense for how the assay you're using to measure IGF-1 in the patients in PATHFNDR-2, compares to the assay that was used for the studies that were done many years ago for octreotide and lanreotide in the same population? And could any differences in the assays rigor influence the results? And if so, do you have any estimate for how much that could translate into?

Yes, so we are using what is currently the gold standard assay for IGF-1 measured in a central laboratory. It's an immunoassay that is very rigorously validated. And probably even more important than the assay itself is the up to-date reference ranges by age for IGF-1. That's been a major area of research over the last 10, 15 years. And so we're using the state-of-the-art measurement technique. And you're right, the older studies used previous assays and also previous reference ranges that were available at the time. However, we have worked with the world's experts on assay -- potential assay differences. And we have taken that into account for our sample size calculations for this study. There could be minor differences, but in the more recent, I mean, there could be more significant differences with older versions of the assay. But we think we have a good handle on comparing to more recently done research, particularly in naive patients with acromegaly.

But Joe, I think also -- this is Scott add that it does get more and more difficult the further back in time you go to compare our data with those earlier studies, and largely because of these assay and perhaps more importantly the reference ranges for the assay. Thanks for your question.

Thank you. Your next question comes from Yasmeen Rahimi from Piper Sandler. Please go ahead.

Good afternoon, team, and congrats on all the progress. Maybe the first question that has been submitted to us all throughout the whole morning has been, investors wondering if the pipe investors were previewed any data related to PATHFNDR-2 or carcinoid or CAH would love to hear your color? And then my second question is for Alan, if you could maybe share what could be a reasonable sample size for the interim readout for CAH, and also maybe a little bit of a reminder of what is considered a clinically meaningful difference in A4 levels and maybe other key endpoints that we should be looking forward to from the unmet need that exists in these patients? Thank you.

Great. Well, You know, I can't answer or discuss, you know, workings of that deal process. And PATHFNDR-2 remains blinded to you, me, and everyone will know the outcome of that trial next month. But it should be obvious to everybody from the list of great funds that we disclosed in our press release that we’re willing to be named and we’re included in the deal, but this isn't a deal or wasn't a deal about handicapping some single short-term readout. This is a high-quality list of new and existing investors with a long-term view that understand and want to support the long-term growth and vision of our company.

Thank you, Scott. That was very helpful.

And on the ACTH side, Alan?

Yes. So, yes, those are all great questions about the CAH study. What is an appropriate sample size for us to, you know, reach some conclusions about safety, pharmacokinetics, and efficacy. So I'll say right off the bat that this is not a pre-specified statistical exercise. This is more of a qualitative look at directional data, which is exactly what we did recently with carcinoid syndrome. This is a rare disease, but in general, we are looking -- you asked what's the most, what's the clinically meaningful change in the pharmacodynamic biomarker of most interest, and that's the androstenedione, as we mentioned. And I think, you know, what we'll be looking for, of course, is easily change or easily visualized changes from baseline in A4 levels on the pharmacodynamic front. And in fact, most importantly, can we achieve normalization of A4, I think is probably what's most clinically meaningful based on what we know now from elevated baselines. And as you mentioned, there are many other potential endpoints besides A4 on the pharmacodynamic front we can look at. And that we are exploring a lot of these in this even this small study in Phase 2 for CAH. I mean, some examples of things that are also important, there are other biomarkers that are of relevance too, like 17 hydroxyprogesterone, which is another biomarker used by clinicians to assess dose, a response to therapy, as well as the diagnosis of the disease. But also things like how are the patients doing clinically? A lot of these patients, for example, female patients with this disorder have irregular menses and can be infertile and we would of course we monitor menstrual cycling in women very closely and there are many other clinically important things like that, that we will follow carefully and I hope we have a good directional signal from our interim analysis that we'll be doing and reporting on by the end of the first-half.

Thank you, Alan, very much.

Thank you. Your next question comes from Jessica Fye from JPMorgan Chase. Please go ahead.

Hey, guys. This is [Indiscernible] for Jess. So we're very close to full data for carcinoid. Can you help us set some expectations there? Maybe like what would represent a win for that update? And then can you provide any updated thoughts on your Phase 3 plans for carcinoid syndrome? Thank you.

Yes, so I mean, I was pretty impressed with our interim data reported in December, I thought that was pretty winning stuff already. And some of these very important endpoints kind of reached statistical significance, even in this small study. So I would say a win for the final data set is really confirming kind of what we saw in our interim data. And also we hope to have more information, expanded information on other exploratory endpoints like key biomarkers and other sort of supplemental data points. For example, you may recall from our interim data report, we -- I was very excited to see not only are the numbers of excess bowel movements and flushing episodes reduced on Paltusotine, but also the urgency of those associated bowel movements and also the severity of those flushing episodes were also very meaningfully reduced. That goes beyond just numbers. It goes to what the patient is actually experiencing and what's most important, the patient. So I'm hoping we'll have additional kind of patient centric information as well.

And maybe comment on Phase 3?

I'm sorry, Phase 3. Thank you. Yes, we are actively designing Phase 3, obviously, and we're using our Phase II database to help with that a great deal. In fact, the Phase 2 database is really essential for this process. I do anticipate based on regulatory history that we'll be designing a -- likely a placebo-controlled parallel group Phase 3 trial. We're exploring a variety of important potential primary endpoints that we will discuss with the FDA, as well as the key secondary endpoints for the Phase 3 trial. Based on historical precedent, we know that the general sample size for Phase 3 trials in this area are roughly, say, between 80 and 150 patients. And I think that's the kind of study we will end up proposing to the FDA. And again, we'll report back once we've had those discussions with them.

Thanks, Jess.

Thank you. Your next question comes from Jeff Hung from Morgan Stanley. Please go ahead.

Thanks for taking my questions. Can you talk about the importance of the acromegaly symptoms diary and your strategy for having that included in the label? And then I have a follow-up.

Actually, I think it's important to point out that, that's fairly unique amongst the SRLs, and we're very excited about it. And maybe Jim, our Chief Commercial Officer, could answer a little more in depth.

Sure. Thanks, Scott. So as Scott mentioned, symptom diary or quality of life has not been a component of the competitive label. So it is something that we do look forward to. And whether it's in the label or whether it's in publication, it's certainly something that will be communicated to key opinion leaders within the United States and globally. Symptom control among patients with acromegaly is a big deal. There's certainly biochemical control as the regulatory endpoint, but as we speak to patients, it is all about symptoms and how they feel. So, it will be a big part of the conversation from a commercial standpoint, and it certainly will be an important component of how Paltusotine performs for both patients and physicians.

Great, thanks. And then what is your latest thinking for the commercial strategy for Paltusotine, and what has been the payor feedback been so far? Thanks.

Yes. So commercial strategy is -- I think as Alan and Scott have mentioned, PATHFNDR-1 and PATHFNDR-2 will provide us with, we hope, the broadest possible label that will allow us to treat and market to both naive patients and patients that are currently going under therapy. In terms of -- we've had a number of advisory boards with physicians and also market research with payors, and I will tell you that based on the PATHFNDR-1 data, the response has been very, very enthusiastic. In terms of a value proposition, we also have been speaking with payors just about the relative pricing within the marketplace, both for the standard of care injectables and depending on channel as well. And within the hospital segment, there is a markup system that occurs where the average markup for payors and for patients in terms of their co-pay within injectable somatostatin analogs that are delivered within the hospital outpatient setting, the markup can be as high as -- or on average, about 300% as high as, in some cases, 700%. So this is certainly a savings that an oral Paltusotine delivered through specialty pharmacy can offer to the payor community and something that we're having continued discussions with payors on that level.

Thank you.

Thank you. Your next question comes from Cory Jubinville from LifeSci. Please go ahead.

Thanks for taking our questions. Congrats on all the progress you've made last year. Quick question on acromegaly. So taking a look across all the historical data sets, naive acromegaly, there's a strong correlation between treatment response and certain baseline characteristics such as age or whether a patient has entered the study with a macro versus a micro-adenoma. Can you give us a better understanding or insight more broadly into how these patient demographics for PASF-2 align across the spectrum of previous studies in this group?

I think the simple answer is we haven't done that analysis yet and some of the sensitivity and subsets will be part of the Phase 3 workup. But broadly, this is a global study with acromegaly patients that we think are representative of the general population.

I think in the literature from previous studies done over the years, it is not easy to identify a clear predictor of response to treatment in acromegaly. Probably if one thing is most useful, it's just looking at the baseline IGF-1 level. If it's very high, it's going to take more lowering to get to normal. That's why we reiterate that in this kind of study where patients -- in PATHFNDR-2 where patients can start out sometimes with very high IGF-1 levels. We should expect a lower rate of IGF-1 normalization compared to what we saw in PATHFNDR-1 where we knew everybody there was controlled at baseline on medication.

Yes, and we've been trying, Cory, as you've been telling other folks, to be sure and remind people that this is not the same population that we studied in PATHFNDR-1 and that overall, our blended estimate for the study is a response rate in the low-30s ballpark.

And you've previously -- building off of that, you previously mentioned that you've used the head-to-head Paltusotine versus octreotide study in your assumptions for at least the Stratum-1 group. Can you walk us through that rationale behind looking at that study to inform potential PATHFNDR-2 outcomes? Especially given when you look across these studies historically, that's probably one of the more conservative response rates we've seen?

Well, it's also one of the most modern and comprehensive studies in the naive population and using the same assay with a close to modern reference range. So I think it's actually a pretty good analog, and we did use that in our powering assumptions. And in that study, the control arm was octreotide, and it was a large number of naive patients. And octreotide reduced IGF levels in the vast majority of patients, but only 24% achieved IGF levels within the normal range. And so that's where we had the powering for that group or Stratum-1 of PATHFNDR-2 study.

Thank you. Your next question comes from Brian Skorney from Baird. Please go ahead.

Hey, good afternoon everyone. Thanks for taking my questions. I guess just following on that last question, can you say anything about the baseline characteristics in terms of what the baseline IGF level was or are in the PATHFNDR-2 study? And it sounds like there's reasonable -- is it fair to say that there's sort of a tradeoff between the primary and secondary endpoint where a lower baseline IGF-1 would mean better response rate, but lower IGF production and higher baseline, would sort of mean the reverse?

Yes, I think we'll just have to wait another month. Sorry, Brian. It's coming. I know everybody wants to see it, but nobody worse than me. So soon is the answer. And was there a part of that, that I could really answer? I kind of lost it at the end.

Just if you could say anything about sort of the baseline IGF-1 level?

Yes, not at this time.

And then maybe as a follow-up to ask something more in the pipeline stage, seems like your thyroid-stimulating hormone antagonist is moving along nicely. I guess, do you think you have the capability to get an oral agent here? And I was just wondering about the specific target. Is it the TSH receptor? Is it IGF-1 receptor? Just trying to think about how to get a handle on how comparable this could be to teprotumumab and any differences between where it's binding to think about?

Yes. No. Yes, I just bumped into one of the chemists in the hall who was really excited about the latest batch of molecules. And we already have good molecules that are orally available, and polishing the last few. I think we're getting pretty close on this program. The target is the TSH receptor. And just to remind people, because this isn't something we've talked a ton about in our pipeline, Graves' disease is caused by antibodies that people develop that activate this TSH receptor. And so the notion is to block that. And Graves' eye disease -- or thyroid eye disease as it's been branded, the more formal name is Graves' ophthalmopathy, but it's such a mouthful that people call it thyroid eye disease. That's caused by the binding of these antibodies to TSH receptors in the cells at the back of the eye. Those receptors then act on those cells and on the IGF receptors on those cells to cause the hypertrophy that results in the protrusion and other problems in the back of the eye. So, we're going to the root of the problem. There hasn't been a new drug for Graves' disease itself since the 1940s. And the TSH receptor is the root problem. If you block that and you have an effective drug for Graves' itself, we think you won't be getting Graves' eye disease. And if you block that receptor for patients who already have Graves' eye disease, we think we can treat it. That's the hypothesis. And, you know, this is yet another peptide hormone receptor that we're trying to replace, or trying to block with a small molecule. And maybe I'm tooting our horn a little bit, but I think the guys in the next labs down the hall here are some of the best in the world -- guys and gals, sorry, are some of the best in the world at making drugs like that. So, yes, we're going to get it.

Thank you. Your next question comes from Douglas Tsao from H.C. Wainwright. Please go ahead.

Hi, good afternoon and thanks for taking the questions. Maybe as a starting point, I'm just curious -- with the CAH readout on the interim look that we'll get, I'm just curious, sort of, is there an operational decision that you make from getting that versus the full readout? I mean, is it sort of similar to carcinoid syndrome where it sort of really helps you jumpstart, thinking about the Phase III study, or are there potential changes that you would make to the CAH study itself that -- sort of mid-course adjustments that would help you sort of better understand, how the molecules behave?

Yes, Doug, it's like all the core endocrinology studies, including the Phase I we did with Paltusotine, where in the earliest cohorts of our SAD study, we knew the drug was working and we knew the pharmacology that was coming out by these changes in hormonal biomarkers. And as this CAH study progresses and we begin to get that type of information, it's an open-label study. So, we're looking at it all the time and we're getting all this information to guide our Phase 3 design. But until we start to, and still -- until we disclose it, we can't be talking about it publicly, either with our investors, or with a broader group of physicians outside of our investigators and our advisory boards. So, we want to be able to talk to a broader community about how we advance this program forward. And that's -- and it's been moving well. So that's why we decided that -- our current estimate is we'll be able to start talking about it next quarter.

And then just a quick follow-up on the TSH antagonist, I'm just curious, what are you looking at, I guess, in a preclinical setting to determine or select your molecule? I'm just curious what sort of you are most focused on in terms of lead candidate selection ahead of obviously going into the clinic and seeing the sort of the impact on thyroid levels, et cetera?

Yes, so it's very much like our other programs. In finding the right molecule, you're trying to optimize 20, 30 different characteristics. And we've had molecules for a long time that were potent at the receptor and able to normalize hormone levels in a mouse bottle. But we're really working on all those other little, polishing to make a good molecule to make sure it's highly orally absorbed, doesn't have drug interactions, has good toxicology profile. But if you're interested in efficacy, I'll point you towards our corporate deck where there's a slide towards the back, where we give mice an antibody just like the humans have that cause activation of their TSH receptor. Their thyroid hormone levels go up remarkably. And then we start treating them with one of our oral candidates. And those hormone levels go back to normal. So, we'll do that same type of study in patients with Graves' disease. So I think it's quite relevant as an efficacy model. But like I said, in many of our programs, it's not about the efficacy, it's about finding the great drug that also has the great efficacy.

Thank you. Your next question comes from Jon Wolleben from Citizens JMP. Please go ahead.

Hey, thanks for taking the question. Two from me. Just wondering if you could give some context about how you think the opportunity for Paltusotine changes in acromegaly if you just have a maintenance label versus a maintenance and treatment label? And then seems like a lot of excitement 4894 and CAH in Cushing's has been a difficult indication and the dynamics are changing there. Are you still thinking about moving forward in Cushing's as well, or is 4894 going to be focused on CAH moving forward? Thanks.

Well, let me address 4894 and then I'll hand it over to Jim to think about the commercial opportunity -- talk about the commercial opportunity. 4894 addresses the ACTH receptor, which is the heart of the body's -- or the center of the body's endocrine response to stressors. And when things go wrong in that pathway, bad things happen. So in Cushing's disease with excess glucocorticoids or in CAH patients with excess glucocorticoids, you're adding too much adiposity, you're increasing blood pressure, you're damaging bone. It's a problem. So, we were out front in CAH. We have an exciting ongoing study with the NIH in Cushing's disease, and we're continuing to work on that. And we're thinking about what else we might do down the road with an ACTH antagonist. This is something nobody else in the world has ever evaluated in humans. And we're going to learn a lot about the pathway in these studies. So Jim, maybe you want to comment on indications and expectations for Paltusotine and acromegaly.

Sure. And I think the question was specifically kind of maintenance versus naive. I mean, from an addressable patient population standpoint, the majority of the patients are currently on treatment. So in any given year, we estimate maybe 500 new patients, or naive patients enter the marketplace. So that gives you approximately 10,000 patients that are maintenance patients. And that's the importance of the PATHFNDR-1 data already in hand, is that group of approximately 10,000 patients. However, don't want to minimize the value of PATHFNDR-2, because, again, PATHFNDR-2 gives us the broadest possible label to really address patients across the continuum. It's differentiated from several products that are in the marketplace. So it will be an important readout for us as we move forward. And I think we hope to glean more than just an indication from PATHFNDR-2. We hope that there's some important data that will differentiate Paltusotine from the injectable somatostatin receptor ligands additionally.

And if I can just add to that a little bit, as amazing as the data was from PATHFNDR-1, it was all about maintaining a level of control in patients who were controlled. In PATHFNDR-2, we're starting with patients who are sick and demonstrating, if all goes well, that Paltusotine can help them lower their IGF levels, lower their symptoms, make them feel better. And there's something visceral about being able to communicate an improvement in a disease condition rather than just a maintenance in the disease condition. And so, we're very excited to see how this plays out next month.

Thank you. Your next question comes from Yuchen Ding from Jefferies. Please go ahead.

Hi, good afternoon. Thanks for taking our question. We have two for CAH, if I may. So number one, just around A4 reductions at week 12. There's actually surprisingly not a lot of data out at week-12, and most are for weeks two to four. So I'm curious to hear what level of percentage A4 reduction do you think will be competitive at week-two, given we already have some of the data out there from others, but those are from earlier time points? And then question two is around a CRF1 competitor who will obviously have some Phase IIb data in March. How do you frame that update given you will report data soon after in Q2? And maybe if I can be a little bit more specific, can you comment on how we should think about percentage A4 change versus the absolute magnitude of A4 change and which should people focus on?

Yes. Let's see how the best way to answer that is. First off, in our study, we're measuring time courses of A4 and other adrenal markers throughout the treatment period. So, they'll be comparator time points at different places. One of the other really innovative things that Alan's doing in that study, and we'd like to make our studies as informative as possible, is we have an option for patients to enroll in what we call the circadian arm where we measure A4 and other markers throughout the day because as you know, those fluctuate. And so understanding the timing of measurements in the day, not just in the weeks, is also important. And I think -- but I've been around this endocrine systems since the earliest days of my career, and CRF is a very exciting molecule that has some wonderfully interesting biologies. But at the pituitary, it is only a portion of the signal that goes into the corticotroph cells that make ACTH. And we now have an estimate from the recent data on crinecerfont that by blocking that signal, you can reduce 45% of the A4 output by the adrenal. So that says there's another 65% of signal going into the pituitary from probably vasopressin or some other things. However, mechanistically at the adrenal, there's only one way that ACTH can act, and that's through its receptor, which is called MC2, melanocortin receptor 2. And that's what we're blocking. So I would expect an ACTH antagonist to have a much more -- if you can fully block the receptor, to have a much larger effect on adrenal A4 output. And we'll know what that effect is in the coming months. So super excited to see that. And I think the community is as well. We've known about ACTH and Cushing's disease since 1910. But nobody's ever had an antagonist in that receptor before. So it's a very exciting advancement in the field.

Thank you. Your next question comes from Leland Gershell from Oppenheimer. Please go ahead.

Thanks and my congratulations on all the accomplishments that have been made. Just curious, Scott, as we look forward to the annual meeting of the Endocrine Society not too long from now, I want to know if you might be able to give us indication of any updates, perhaps on some of the earlier pipeline programs that you're moving forward, or just look forward to? Thank you.

Yes, thanks. That's an annual pilgrimage of endocrinologists from around the world to get together and talk about the latest in endocrinology. And I've been going since the 1980s. I love that meeting. We will be sending, as usual, a large contingent. We're submitting many abstracts. I frankly don't know the final list of abstracts, but that'll be coming out as we see the acceptances. And I think you can look for a strong presence from -- us there in Boston this June.

And then just a question, just to clarify on 04894 between Cushing's and CAH, these two -- your press release had mentioned the CAH readout would be next quarter. I think you had indicated previously that we may see Cushing's data in Q2, but that wasn't mentioned. So is Cushing's reveal going to be perhaps moved to Q3? Or I'm just wondering if you might have any indication there?

No, I think we just didn't do a diff between the two discussions and maybe didn't spend enough time talking about Cushing's. So let's see how it plays out. I think there's a chance we'll hear about both. But 4894 is certainly something of great interest on many fronts. But don't interpret any subtlety in the way we phrase things as any loss of interest in Cushing's disease.

Thank you. That's all the time we have for questions today. So I will turn it back to Scott for closing remarks.

Thank you, everybody, for joining us today. We appreciate your attention, your support, and look forward to talking to you more in the future. Thank you.